Leasehold, Freehold and Share of Freehold: What You Actually Own in a London Flat After the 2024 Reforms
When you buy a flat in London, new or old, you almost certainly buy a long lease. That is legal ownership of the flat for a fixed term, often anywhere from 99 to 999 years, granted by the landlord who owns the building, called the freeholder. You can sell it, let it, mortgage it and leave it in a will. What you do not own is the structure, the land under it or the common parts, and you pay a share of the building’s costs through a service charge.
Two changes have made new leases better for buyers than they were a few years ago. Most long leases granted since 30 June 2022 carry a ground rent of one peppercorn a year, which means nothing in practice. And the Leasehold and Freehold Reform Act 2024 has started to strengthen leaseholders’ rights, although as of October 2026 only part of it is in force.
A further reform bill, which would make commonhold the default for new flats, exists only in draft. Below we separate what is law today from what is proposed, because sales material does not always do so.
Why a London flat is almost always leasehold
Leasehold is the normal tenure for flats in England. In 2024 to 2025, 58% of all flats in England and 93% of owner-occupied flats were leasehold, and flats made up 69% of the country’s estimated 4.90 million leasehold homes. London has the highest leasehold share of any region: 39% of its dwellings, or 1.44 million homes.
A block of flats has shared parts, such as the roof, the lifts and the entrance, that someone has to own and run. In England that is normally the freeholder, who grants leases of the flats and recovers the running costs through the service charge. Freehold, outright ownership with no end date, is the normal tenure for houses; individual flats are rarely sold freehold.
A common worry among international buyers is that leasehold means renting. It does not. A long lease is a property right registered in your name at HM Land Registry. The real questions are how long the lease runs, what it costs to hold and what it lets you do.
The four tenures side by side
| Tenure | What you own | Who runs the building | Where you meet it in London |
|---|---|---|---|
| Leasehold | The flat for the lease term | The freeholder or its managing agent, funded by service charges | Almost all new-build flats and most older ones |
| Freehold | Land and building, with no end date | The owner | Houses; very rarely a single flat |
| Share of freehold | A lease of the flat plus a share in the freehold, usually through an owners’ company | The flat owners together | Mostly older converted buildings |
| Commonhold | The flat as freehold plus membership of a commonhold association | The association, with no landlord | Rare: fewer than 20 developments in total |
Share of freehold and commonhold in practice
Share of freehold
With share of freehold you still hold a lease of your flat, but you also co-own the freehold of the building with the other flat owners, usually as a member or shareholder of a company they own, or directly on the title where there are four owners or fewer. The lease terms still bind you. What changes is control: the owners together set the service charge and can usually grant lease extensions among themselves. This arrangement is more common in older converted buildings than in new-build towers, so a buyer of a new flat is unlikely to be offered it.
Commonhold
Commonhold gives you the freehold of your flat and membership of a commonhold association, a company that owns and runs the common parts. There is no landlord and no lease term. It was created by the Commonhold and Leasehold Reform Act 2002 and came into force in 2004, but take-up has been tiny, with fewer than 20 commonhold developments, and lenders have been cautious about it. For now, if a London scheme is sold as commonhold, ask your solicitor and your lender about it early.
Ground rent on a new lease: the peppercorn rule
Under the Leasehold Reform (Ground Rent) Act 2022, most new long residential leases of more than 21 years, for a single dwelling and granted for a premium on or after 30 June 2022, can only carry a peppercorn ground rent. The landlord cannot charge a fee for collecting it. For retirement homes the date is 1 April 2023.
The exceptions matter for off-plan buyers. The rule does not cover a lease granted under a contract exchanged before 30 June 2022, even if the lease itself is granted later, and some long-running off-plan schemes fall into that category. Business leases, community-led housing and some home-finance products are also outside it, and a voluntary lease extension can keep the old ground rent for the rest of the original term. Local Trading Standards enforce the Act, with penalties of £500 to £30,000, and any prohibited rent must be refunded within 28 days.
For a buyer completing on a new-build flat in 2026, the lease should therefore show a peppercorn. Your solicitor should confirm it, and confirm when the developer’s original contract was exchanged.
The 2024 Act: what is in force today
The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024, but most of it needs further steps before it applies. As of October 2026, three sets of changes are in force:
- from 24 July 2024, provisions on rentcharges, service charge disputes and amendments to the Building Safety Act 2022;
- from 31 January 2025, the end of the two-year ownership requirement, so a new owner can claim a statutory lease extension or join a freehold purchase straight away;
- from 3 March 2025, changes to the Right to Manage, under which leaseholders can take over management of their building: the limit on non-residential space in mixed-use buildings rose from 25% to 50%, and leaseholders no longer pay the freeholder’s costs of a claim.
For a buyer of a brand-new flat on a lease of well over 80 years, the extension rules are a distant concern. The Right to Manage change is more relevant, because it makes it easier for residents of a mixed-use tower, with shops or offices below the flats, to take control of how the building is run.
What has not started yet, and the court challenge
Several of the Act’s headline measures are on the statute book with no commencement date:
- the abolition of marriage value, the extra premium payable today when a lease with 80 years or less remaining is extended;
- a new valuation method for lease extensions and freehold purchases, and a standard 990-year lease extension at zero ground rent;
- a ban on the sale of new leasehold houses, with limited exceptions;
- a package on service charge transparency.
Progress has been made on two of them. The government’s consultation on the valuation rates opened on 15 July 2026 and was extended to close on 21 October 2026. On the same day the government confirmed that landlords will have to provide an annual building report and use a standard service charge demand form, that leaseholders will be protected from paying landlords’ legal costs without a court or tribunal check, and that they will have a right to building information going back up to six years. These are due to come into force as soon as possible from 2027, through secondary legislation. Rules on insurance commissions need further consultation.
The reforms also face a legal challenge. A group of freeholders, including Grosvenor, Cadogan, Howard de Walden and John Lyon’s Charity, argued that the valuation and ground-rent changes breached their human rights. The High Court dismissed the challenge on 24 October 2025. The decision is under appeal, with a Court of Appeal hearing due in April 2027.
The next reform: the draft Commonhold and Leasehold Reform Bill
Everything in this section is a proposal, not law. The government published a draft Commonhold and Leasehold Reform Bill on 27 January 2026, confirmed it in the King’s Speech of 13 May 2026, and the Commons Housing Committee published its report on the draft on 27 May 2026. Its main proposals are to:
- cap ground rent on existing long residential leases at £250 a year, falling to a peppercorn after 40 years;
- ban leasehold for most new flats and make commonhold the default;
- abolish forfeiture, the landlord’s right to end a lease for a breach;
- make it easier to convert existing buildings to commonhold, and add further service charge transparency.
The government expects the ground-rent cap to be in place in 2028. As of October 2026 the Bill had not been formally introduced to Parliament, and the government had said it would bring a substantially amended version in autumn 2026. Until it passes, forfeiture remains part of the law, and new flats continue to be sold as leasehold.
For a buyer today, a new flat bought on a long lease with a peppercorn ground rent is already close to what the reforms aim for on rent. The open questions are service charges and how the building is managed, which is why our guide to running costs spends most of its length on them.
Before you sign the lease: what to check
- The lease term, written as a number of years from a stated start date, not as “long”.
- The ground rent: a peppercorn, or, if not, why not, including the date the developer’s contract was first exchanged.
- The service charge clauses: what is covered, how costs are shared and what the first-year budget is.
- Use restrictions: many leases forbid short lets or business use, which matters if you plan to let the flat. See our guide to renting out a London flat.
- Who the freeholder and the managing agent are, and whether there is a residents’ management company.
- For a resale flat, the building’s fire-safety status and whether your lease qualifies for the Building Safety Act leaseholder protections, which can be checked with the government’s online checker.
A London solicitor reads the lease for you as part of the purchase; our step-by-step buying guide explains where that happens. Current London homes are on our properties page.
